P&G companies get their mojo back!

Shares of Gillette India and P&G Health and Hygiene are up 13% and 1.3% respectively after both announced strong set of numbers for the December quarter, literally getting their mojo back, after a dull September quarter results.

Gillette India reported 13% QoQ rise in revenue at Rs. 498 crore, aided by higher advertising spend, while net margin strengthened to 7.4% (from 4% QoQ) as input costs declined. December quarter PAT more than doubled to Rs. 36.9 crore from Rs. 17.8 crore in September, for the maker of Gillette, Duracell and Oral-B.  

On the other hand, P&G Health’s second quarter revenue grew 12% QoQ to Rs. 644 crore, despite 16% contraction in advertisement and promotion spend (down to 13.6% of sales in Q2 versus 18.2% in Q1 and 14.4% in FY14). Despite higher royalty outgo at 4.9% of sales, EBITDA strengthened to 22.6% in December quarter, from 17.4% QoQ and 20.7% YoY, due to strong innovation and superior product strength in Vicks, Whisper and Old Spice.

Gillette currently trades at Rs. 3,965 while implies a PE multiple of 100 times and sales multiple of 6.6 times. On the other hand, P&G Health, ruling at 87,019, enjoys a PE of nearly 70 times and sales multiple of 9 times. Thus, both the P&G Group companies continue to enjoy premium valuations not just among the FMCG peers, but across the board in India.